Choosing the Right Life Insurance Policy for People Over 50
Life insurance is a useful way to protect loved ones should something unexpected happen. In 2020, around 54% of Americans had life insurance coverage. But keep in mind that life insurance shopping can be a little different over 50. Some older policyholders may have fewer financial responsibilities, such as kids at home, a mortgage, and auto loans, and their coverage needs may be lower. However, financial responsibilities don't go away completely, and finding life insurance quotes over 50 can take a little more work because of their older age. Here's what to consider when adults over 50 are looking for an affordable life policy.
1. Compare costs
Older policyholders will face higher premiums, so it's important to compare costs and coverage between policies. One of the best ways to do this is to shop for multiple life insurance quotes online. Policyholders can save time and easily compare premiums across different insurers.
2. Consider policy types
People over 50 have access to various types of life insurance policies. Here are a few of the most popular:
Term life insurance
Term life insurance provides coverage for a fixed period, usually between 10 and 30 years. If the policyholder dies during this period, the insurer will pay out a significant death benefit. However, if the policy term ends while the insured is still alive, they'll have to get a new policy. Many term life insurance policies are often cheaper than permanent policies and offer similar levels of coverage.
Permanent life insurance
Permanent life insurance is more expensive than term life insurance, but it provides guaranteed, lifelong coverage, as long as the insured continues to pay premiums on time. Permanent policies also come with cash value growth components. Part of each premium the policyholder pays goes into this component, which grows tax-deferred at a certain rate, depending on the policy type.
Once the cash value grows large enough, the policyholder can withdraw from it, borrow against it, or, with some policies, pay premiums with it. When policyholders surrender their permanent policies, the insurer pays out their cash value minus surrender charges.
Final expense insurance
Final expense insurance is a small whole life insurance policy designed to help beneficiaries pay for the policyholder's end-of-life costs, such as funeral expenses and medical bills.
Final expense insurance policies are much cheaper than full permanent policies and come with cash value. They don't often require a medical exam, making them easier for people over 50 to qualify for.
3. Understand coverage needs
A policyholder's coverage needs depend on their income, expenses, and beneficiaries. Policyholders should generally get a death benefit seven to 10 times as large as their income. However, policyholders with several beneficiaries, such as children, may want more coverage.
If a policyholder has multiple beneficiaries or longer-term expenses to cover, it may be wise to consider a larger death benefit. For example, policyholders with mortgages and car payments should factor these debts in, as their beneficiaries may need additional funds to pay those off.
Getting the right life insurance policy after 50
Purchasing life insurance after 50 may seem daunting, but the process is still nearly the same. Older policyholders should think about their coverage needs and spend time comparing policies because premiums may be higher. Weighing these factors closely and gathering several quotes will help people over 50 get the coverage they need at a rate within their budget.
Author: Michael Bertini
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